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Proposals to re-shape the presentation of financial statements under IFRS® Standards

Changes proposed to financial statements

Focus is on making communication of companies’ financial results more effective by introducing more structure and transparency to the presentation.


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Proposed changes to the way companies report their financial performance are expected to improve the usefulness of financial statements and their relevance, and have been issued in response to investors' demand for greater comparability across companies.

The proposals on how financial statements are presented - issued by the International Accounting Standards Board (the Board) - would introduce significant changes to the structure of a company's income statement, more discipline and transparency in presentation of management's own performance measures and less aggregation of items into large, single numbers. Presentation choices in the cash flow statement would also be reduced, improving comparability.

Welcoming the draft, Gabriela Kegalj, KPMG's global IFRS presentation leader, commented: “The proposals offer greater comparability and increased transparency in financial statement presentation - a clear benefit to investors and other users. They also enable management to tell their own story by acknowledging use of management performance measures, commonly referred to as 'non-GAAP measures,' albeit restricting their location to the notes only.”

Kegalj continued:

“Companies may see significant changes in their income statement - with new subtotals and/or aligning their self-defined subtotals with the new definitions in the proposals. The impact on companies may vary depending on current presentation practice under IFRS Standards, which may have been influenced by previous GAAP or regulatory requirements.”

Kegalj added:

“There could be some major challenges. The proposals would require preparers to determine which of their associates or joint ventures are 'integral.' That could require significant judgement.”

Wietse Koster, KPMG's global IFRS presentation deputy leader added: “Companies are increasingly using non-GAAP information to explain their financial performance. The Board's proposals acknowledge the importance of these management performance measures and investors' demand for them. The proposals could add more credibility to these measures: companies and their investors stand to gain as long as these are presented in an unbiased and transparent way, properly defined, explained and reconciled.” 

Koster added:

“The proposals seem to focus on greater transparency and comparability when companies present management performance measures. The proposals would permit companies to use management performance measures to communicate more effectively and achieve greater alignment with any measures presented outside the financial statements.”

Kegalj commented: “The Board's chairman has referred to this initiative as a game changer, and that's not an understatement.”

The public consultation period is open until 30 June 2020.

For further information, contact:

Brian Mairs
+44 203 3064386

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

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